Interest earned on both the initial principal and the interest reinvested from prior periods is called:
A)free interest.
B)dual interest.
C)simple interest.
D)interest on interest.
E)compound interest.

Question

Quizplus · Accepted Answer

Compound interest refers to earning interest not only on the initial principal but also on the interest earned in previous periods that has been reinvested.

Interest Earned on Both the Initial Principal and the Interest